In an earlier blog published 10-30-12, we tracked some of the developments in the so-called "historic" National Mortgage Settlement (NMS) with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup and Ally which was announced in February, 2012. To review: The NMS encouraged these five "bad actors" to reach out and actively solicit homeowners for loan modifications, short sales or a reduction of the balance owed on a loan. Like many of you, I was skeptical after the earlier efforts of the U.S. Treasury Department under HAMP to offer financial incentives to lenders to encourage and jump-start loan modifications for homeowners was unsuccessful.
Clients with a loan with one of the five lenders have received "solicitation packages" which they forwarded to us for review and for assistance in evaluating the offer. The most recent "solicitation package" I reviewed was an offer to reduce the principal balance from $282,181.42 to a new balance of $120,000.00. The old monthly payment was $2017.00 (including prin., inter., taxes and insur.). The new monthly payment is $1370.80 (including piti). The interest rate remained the same. It should come as no surprise to anyone that the client eagerly embraced the proposal.
A recent news item in the Atlanta Journal-Constitution stated that so far in Georgia, the five lenders have "provided $480.9 million in debt relief to more than 9,500 borrowers", that is, "forgiven" $480.9 million owed to the lenders. According to the news item, forgiveness of balances owed to assist Georgia borrowers just to close on "short sales" "totaled $221.6 million". So, at least it's a start!